Gold Bullion – On the verge of a major breakout? Wednesday, Sep 8 2010 

Historically, the argument against Gold was that it provided no yield to investors. Stocks, bonds, and cash all provide some sort of yield so Gold as an investment has no merit.

But that view appears to be changing, with volatility in the equity markets, bonds now providing little or no yield (witness the US treasury yield curve and IBM’s latest offering), and money markets and cd’s providing scant yields Gold is looking much more attractive as a place to park cash.

Seasonally, the fourth and first quarters of a year are the most bullish for Gold.

In countries such as China and India which are experiencing strong economic growth Gold is looked at as a store of value. In both countries imports of Gold are rising as citizens view Gold as lucky and a store of value.

Recent news out of Europe indicates market participants are increasingly worried about the stress tests performed on European banks as they are increasingly being viewed as not that stressful at all.

In the US the economy appears to be slowing into a 1-2% growth range, with a budget deficit of over a trillion dollars, new spending proposals, and the Federal Reserve instituting a Zero Interest Rate Policy (ZIRP).

So while we look over the world we see two major areas with slow growth, Europe and the US, and investors rushing to Gold as a safe haven to protect against problems in the banking sector and at the sovereign level.

In Asia strong economic growth is allowing investors to diversify their wealth by purchasing and giving Gold as gifts.

While we may be near a major resistance level, Gold has provided investors with a safe haven in times of trouble. Since its rally from the 2008 lows Gold has seen rising support levels as investors buy on any dip.

Technically, the weekly charts have six straight weeks of upward price movement and may make a slight pullback at this major resistance level. Silver is also outperforming Gold as well which is often a sign that a pullback in both markets is forthcoming.

Investors would be wise to buy Gold on any dips and be ready to allocate some capital before the next leg up starts.

Next week: Gold Equities – Where is the Bull?

Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

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Bullish or Bearish? Wednesday, Sep 1 2010 

The market this year has had some rough times. The rally which started in March of 2009 topped out in April of 2010 and caused the market to trend lower for the last 5 months. But as mentioned in my last article the market is approaching a moment in time when a solid buying opportunity will emerge.

On the bearish side of the equation we have weak economic growth, stubbornly high unemployment, massive budget deficits, and a weak banking sector. There is also the issue with the Hindenburg Omen, for which a downside move of just a few more percent would make the signal a success.

On the bullish side we have an equities market that seems overvalued from a PE perspective is undervalued based on dividend yield when compared with similar yields on US Treasuries, AAII surveys showing that small investors are bearish, and favorable profit growth in the large cap sector.

The stock market has in many way mirrored the returns of the market in the 70’s where we had whipsawing action sideways for many years until inflation was dealt with by Paul Volker and set the stage for the great bull market in equities that ran until 2000.

Intel’s announcement guiding revenues and gross margins lower in the third quarter may be the harbinger of earnings warnings in the tech sector as companies move to get the bad news out early.

September is a month where earnings and economic worries are likely to provide some stormy weather for the markets but once we move into the fourth quarter the skies should clear for a nice rally into 2011 although we are likely to end the year on the downside.

As mentioned before, there are a number of high quality blue chip stocks with attractive dividend yields that can provided comfort to investors with a steady income stream. Once the weather clears these stocks should lead the market higher as investors look to dividends for safety in these turbulent times.

Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Four year Presidential Cycle and the Equities market Tuesday, Aug 31 2010 

US equities have had a difficult time since April of this year as fears over a double dip recession, a stubbornly high unemployment rate, and the possibility of slowing corporate profit growth have weighed on the markets. In addition, small investors are pouring money into bond funds sending yields crashing through the floor while equities are being labeled as risky investments.

But one of the great trading cycles is getting ready to flash a contrarian buy signal to the markets.

The four year Presidential Cycle looks for higher returns during the last two years of a Presidential term than the first years. The expectation is that as a President takes office he begins to implement his proposals and investors, hunker down waiting to see the results. During the final two years the President becomes more concerned with his re-election and will ‘prime the pump’ in order to secure re-election.

As we move through the second year of the Presidential Cycle a low is put into place which often leads to a solid rally into the third year.

I would like to bring to everyone’s attention an important article written by Bill Hester of the Hussman Funds entitled Business Cycles, Election Cycles and Potential Risks.

The chart on Election Cycle Returns shows that during year 2 of the Presidential Cycle the first quarter is up on average while the second and third are down leading to a rally in the fourth quarter which lasts into 2011.

So far in 2010 the stock market is following the chart perfect with a move up in the first quarter followed by pullbacks in the second and third quarters of the year.

We may be near a bottom in the equity markets as September is the worst month on average for equities. We are likely to see some continual downside pressure to equities during the September time frame as continued weak economic reports and concerns over third quarter profits will dominate the news flow.

The AAII Investor Sentiment Index last week reached levels which foreshadow the beginning of an upcoming rally in the equity markets.

Yields on corporate bonds and Treasury securities are at extremely low levels on an historical basis while dividend yields on high quality blue chip equities are at very attractive levels. Small investors would do well to begin preparing for the next big rally by having some cash on hand ready to allocate when the next buying opportunity approaches in the coming months.

While the news flow for equities may be negative small investors should look ahead to the light at the end of the tunnel signaling an upcoming rally, one which may catch many market watchers by surprise.

Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

The Week in Review, August 20, 2010 Saturday, Aug 21 2010 

The week was filled with disappointing economic reports from the advanced figure for seasonally adjusted initial unemployment claims jumping up to 500k and the Philly Fed Survey showing negative growth. If the ISM Manufacturing PMI confirms the Philly Fed Survey we are looking at a contraction in the manufacturing sector as it appears the underlying economy is much weaker than expected and the idea of a V shaped recovery might be put to rest.

On Monday, an article appeared on Bloomberg where Yu Yongding, part of a foreign-policy advisory committee and former adviser to the People’s Bank of China, stated that China has been a buyer of European bonds. Japan’s Ministry of Finance also stated that China was a buyer of Japanese debt during the first half of 2010. The US Treasury announced that China’s holdings of US debt were cut by $100 billion from June of last year. There was no word if the cuts were sales or maturation of debt with the proceeds being reallocated to Japan and Europe. 1

HP’s drop also weighed on the Dow as traders and managers weighed the future of the company.

The VIX traded flat for the week and is pushing up against a resistance level around 27. A move above this level would signal a coming correction in the markets. The weekly charts have a bearish tilt with the possibility that the we may see a move up but this is a difficult chart to read and the VIX is often oversold here for long stretches of time.

North American markets acted accordingly with the S&P selling off after putting in a possible short-term top at 1100. The S&P 500 seems range bound between 1070 and 1100 after last weeks shock. The 50 day moving average is at 1089 and we seem so be yo-yoing around this area looking for a resolution.

Canadian markets showed a bit more strength closing above its 200 day moving average but traders are fearful of what weakness in the US would mean for its largest trading partner. The BHP offer for Potash has everyone excited over more large M&A transactions coming on the heels of the Kinross-Red Bank merger.

Over in Asia markets were mixed with Japan showing signs of a slowdown while Taiwan is steaming ahead. GDP from Taiwan grew 12.53% in the second quarter, beating estimates of 10.15%, and only slightly down from 13.71% during the first quarter.

Hong Kong government took further steps at tightening as they extended the 40% downpayment requirement to apartments costing HK$12 million in an attempt to stabilize price appreciation. The prefectures government is under pressure to cool the market as the Hong Kong Dollar is pegged to the US Dollar and the ZIRP policy in the US is causing a real estate boom. Mortgage rates in Hong Kong are as low as 70 basis points above the Hong Kong interbank offered rate (0.22%) or just under 1%.

The Baltic Dry Index has fallen by more than 50% during the June 1 to July 15th period signaling concerns that the global economy may be slowing down. One factor to consider is that China ended export tax subsidies in July which more than likely push a lot of export shipments into June.

Next week:

Monday: German Manufacturing PMI
Tuesday: Existing home sales in the US
Wednesday: Durable Goods in the US and Trade Balance in Japan
Friday: 2nd Quarter US GDP Estimate, U of Michigan Confidence, Household Spending in Japan
All Week: Speeches by Federal Reserve Governors

1.

Hindenburg Confirmation and Political Comment Friday, Aug 20 2010 

For readers wondering about my political views, I am an independent voter with conservative leanings. When looking at politics in the context of investment decisions I place the political news in a box and set my personal feelings to the side in order to look at the political machinations with a clear eye and mind while searching for how it will affect the markets. With the invisible hand becoming more pronounced in the Treasury markets it helps to understand and watch how things unfold rather than letting something negatively color your viewpoints and potentially ruin a trade. Politics and investing are like oil and water, they do not mix well and it helps to keep both separated. When they do mix watch how they settle and let Mr. Market do the talking.

Today’s drop on weak economic news triggered the first confirmation of the Hindenburg Omen. The 10 week moving average is still rising, the McClellan Oscillator turned negative, New Highs were above the minimum level and the New Lows just barely beat the minimum of 69 new lows by 1 with 70 New Lows on the day. Both New Highs and New Lows were above the minimum and the New Highs were not twice the New Lows.

While the Hindenburg Omen does not guarantee a stock market crash the closer they signals are together and the number of signals should send a warning to investors. That said, I will repeat what I said earlier this week:

“While a Hindenburg Omen does not mean the market will crash it is a signal that a fat tail event may be approaching in terms of a market pullback.

It is not my belief that we are heading for a second stock market crash but investors should tighten stops on long positions and/or hedge long positions until the danger passes.

The underlying market weakness following Wednesday’s drop combined with weak economic reports should give investors pause. The inability of the market to move higher indicates a lack of buyers as investors seem to be waiting on the sidelines.

Now there is good news to report. This drop, should it occur, would put in a major low for the four year Presidential cycle leading to a solid rally into 2011. In other words, protect your long positions and get your cash ready to allocate so you can buy at the bottom.”

Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

The Hindenburg Omen – A Potential Fat Tail Event on the Horizon? Tuesday, Aug 17 2010 

Last week the S&P 500 had been flashing a number of technical signals to the market. Amongst the various signal we had an inverse head and shoulders and an ascending wedge giving investors bullish and bearish signals. Wednesday provided a resolution with the ascending wedge breaking down and the market moving significantly lower. More troublesome was the market’s action the next three trading days. After large moves in one direction the market typically consolidates in the opposite direction as short term traders look to book profits and others buy on dips/sell into strength. What we had was the opposite, a market that could not move higher and instead drifted lower.

On Thursday, a Hindenburg Omen signal was triggered. A Hindenburg Omen is a statistical sign made up of market indicators which foreshadows a move to the downside. Just one Hindenburg Omen is not enough as there needs to be confirmation of the first signal within 36 days. If this signal is not confirmed then the signal is not valid.

The Hindenburg Omen has 5 criteria which must be met.

1. The NYSE 10 Week moving average is rising.
2. The McClellan Oscillator is negative on that same day.
3. The new 52 Week Highs cannot be more than twice the new 52 Week Lows (however it is fine for 52 Week Lows to be more than double new 52 Week Highs.) This is a mandatory condition.
4. The daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day with
5. The smaller of the two numbers being greater than or equal to 69.

Delving into these criteria what we find is an indicator which attempts to signal the possible occurrence of a fat tail event.

First, we have a rising NYSE 10 Week moving average which suggests a market trending upward followed up by a fair portion of stocks making new highs.

But underneath the surface there is trouble. The McClellan Oscillator, used by traders to gauge market breadth, is negative signaling that more stocks are falling than rising. This is a sign that a correction may be approaching.

Next we have the 52 Week Highs and Lows. In an rising market one would expect significantly more new 52 Week Highs than new 52 Week Lows. But here the number of new 52 Week Lows are close to the number of 52 Week Highs, relatively speaking.

The number of 52 Week Lows are also more than 2.2% of the total NYSE issues traded that day. This sends a signal that the 52 Week Lows tail is getting fatter, a sign of underlying weakness.

What we find is that while the market appears calm, there is significant turmoil and weakness underneath the surface.

While a Hindenburg Omen does not mean the market will crash it is a signal that a fat tail event may be approaching in terms of a market pullback.

It is not my belief that we are heading for a second stock market crash but investors should tighten stops on long positions and/or hedge long positions until the danger passes.

The underlying market weakness following Wednesday’s drop combined with weak economic reports should give investors pause. The inability of the market to move higher indicates a lack of buyers as investors seem to be waiting on the sidelines.

Now there is good news to report. This drop, should it occur, would put in a major low for the four year Presidential cycle leading to a solid rally into 2011. In other words, protect your long positions and get your cash ready to allocate so you can buy at the bottom.

Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Technical Notes – August 1, 2010 Monday, Aug 2 2010 

Hong Kong (Hang Seng Index)

The HSI stands at an important crossroads that will set the stage for a major move within the next two weeks. While the HSI has broken above its June highs, the 200-day moving average is providing ocular resistance while an ascending wedge formation has formed. The HSI looks to be entering overbought territory, a pullback may be coming shortly, and investors should tighten stops and be wary.

Longer-term charts sit at resistance levels and a move above these resistance levels would set the stage for a nice rally higher which may test old highs. If there is a correction, the strength of the pullback will determine the depth. Right now the technical indicators are all over the board and investors should proceed with caution.

Buried within the monthly chart is a pattern of lower highs and lower lows that needs to be reconciled before the market can move higher.

Japan (Tokyo Nikkei Average)

Political changes and continued deflation are causing the Japanese stock market to be a laggard in 2009. If the political waters begin to clear it is likely that the market can make a move higher closing the gap between its Asian peers.

The short-term charts may look like an ugly mess technically but if the 9200 level can hold, the economic slowdown is not too deep, and political indicators improve we may see the index move above the 50 day moving average.

The longer-term charts are sending clearer signals. If the current level holds as support, the stage is being set for a very good rally. One that may surprise and shock most portfolio managers as to the length and size of the potential move.

Should the current support level fail look for a move back to the 2003 lows and if those lows fail the 2008-09 lows.

Thailand (Thailand SET Index)

It has been my experience that whenever the Thai market is outperforming its regional peers, the stage is being set for a larger pullback. Managers have missed most of the run this year choosing to avoid the market waiting on the sidelines for the political waters to clear.

Both the short and long-term charts are in the overbought area signaling a pullback within the coming weeks. The SET Index may make a blowoff move to 900 but if that were the case investors should move to cash and get ready for a significant correction.

While I am bullish long-term on the SET and Thailand, the charts now signal that a correction may be in the cards and this 2010 outperforming market may give back a sizable amount of its gains.

Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Technical observations – July 25, 2010 Monday, Jul 26 2010 

United States

S&P 500

Technically, the daily chart is having a nice rally through the 50-day moving average and after factoring in the bearish sentiment as measured by AAII this rally may have some legs in the short-term. In order to turn positive the market is going to have to move through the 200-day moving average AND the June high, which would set the stage for a rally up to the April highs.

The weekly chart is bearish with a potential head and shoulders top formation and resistance at the 50-week moving average. Failure to break through resistance will be a significantly bearish indicator and will likely signal a move to new lows on the year.

The monthly chart is bearish and has been so since March when the stochastic peaked and we tested resistance at the 50-month moving average. Currently we sit at an important crossroads testing support at the 200-month moving average. Failure to maintain this support level is a very bearish sign and sets the market up for a possible retest of previous lows.

Nasdaq Composite

The daily charts of the NASD have just pushed through the 50 and 200 day moving averages with the next target the June highs. Technical indicators appear to be getting close to overbought territory and how the index behaves as it approaches the June highs will determine if this is a short-term top or preparation for a move to test the April highs.

The weekly chart is a bit more bullish as the index has just pushed through a convergence of the 50 and 200-week moving averages. A head and shoulders pattern is in the process of forming attention should be paid in the event the current rally runs into resistance in a few weeks time.

The monthly chart has just pushed through a key resistance level with the 50-month moving average. While the technical indicators are bearish, it is not inconceivable that the current rally continues for a small amount of time before finally rolling over.

Canada

TSX

On the daily charts, the TSX is tracking the Nasdaq Composite. Having already moved through the 50 and 200 day moving averages the next test will be the recent July high, which stands very close to Friday’s close. A move higher would mean the TSX would likely test the June highs then the April highs.

It is possible the TSX will lead the US and provide market leadership over the coming weeks.

The weekly chart shows a range bound market with the 200-week moving average providing significant technical resistance. A move through the 200-week moving average would be a significant technical breakthrough and a bullish signal but as we approach that point we may see the market enter into overbought status.

The monthly chart is showing significant technical resistance at the 50-month moving average level that is approximately 200-week moving average level. A move through this level would be a very bullish indicator for the Canadian markets.

It is possible that the Canadian markets diverge for some time with the US markets as the Canadian economy as a whole emerged from the downturn relatively unscathed and the Canadian banking sector is rock solid. The biggest concern would be a slowdown in the US caused by a lack of hiring, weak banking sector, a weak housing market, and slow consumer demand. Since a significant amount of Canadian exports are dependant on the health of the US economy Canadian economic growth will likely slow over the second half of 2010 into 2011.

A strong banking sector and vibrant consumer demand will allow the Canadian economy to weather and stormy seas caused by a slowdown in the US allowing the Canadian economy to be in the sweet spot globally with moderate economic growth coupled with low inflation.

Summary

So far, our beginning of the year call to be long the first quarter and short thereafter has been correct and the market appears to be following the expected path for 2010.

Looking back over history and the four-year Presidential cycle, the stock market’s low in the 2nd year of a Presidential term provides a nice rally into the third year as the President gears up for his reelection campaign.

Currently, the cycle was thrown off by the crash in 2008 along with the sharp rebound in 2009 but should return to form this and next years.

Within the larger 10-year cycle, the stock market has negative returns during the first few years setting the stage for positive returns later in the decade.

Investors should remember that while stocks are cheap, in the context of a long-term sideways market, it does not mean they cannot get cheaper.

Classic bull markets start in times of cheap stocks, as measured by PE’s, over a long-term horizon. It is likely that PE’s will continue to move lower as we see earnings increase over the next few years setting the stage for the next classic bull market.

With the indices led higher by low quality stocks and typically underperforming markets leading the way investors should be wary over the rest of the year until a tradable low is in place.

While the market continues to churn it is best if investors wait on the sidelines for the dust to clear.

Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

2010 Mid year commentary – Investment Thoughts Thursday, Jul 22 2010 

It was my mantra at the beginning of the year that long-term investors should stay in cash and wait for attractive buying opportunities to come along.

Price-earnings ratios are once again becoming attractive. While they may seem high and nowhere near lows that sparked past bull markets investors would be wise to begin putting together lists of favorite stocks and begin monitoring prices in anticipation of putting cash to work.

We may take 6 months to a year to find a bottom but for investors it is better to well prepared in the event a buying opportunity comes along.

At this moment, we are in a stock pickers market and you should act accordingly.

Globally, markets will likely take their cues from the US and investors should proceed with caution.

Until the US government makes a serious effort to reign in spending investors should have money in Gold and Silver as a hedge against currency debasement and loss of purchasing power relative to the world.

Gold should move to new highs later this year but will likely see some sideways to lower trading action in the near term as we move through the historically weak summer period.

Gold stocks are less attractive to me. They should be trading higher based on a higher gold price but there are some factors restraining stock prices.

First, you have rising costs at mines partly related to the depreciation of the dollar. While we point to the USD Index, the truth is over 50% of the Index is made up of the Euro and I believe approximately 90% is European currencies with little or no exposure to Asia and South America.

Second, gold stocks are aggressively acquiring the remaining low hanging fruit in the exploration area, in many cases with stock. The problem with these transactions is the effect of dilution since the acquired assets have zero revenues.

Personally, I am waiting for a bit of a pullback to the 1175-1150 area with an absolute floor at 1065.

Investors in gold equities should slide down the exploration curve, as there appears to be value at the far low end in the prospecting and drilling areas.

Silver is attractive at the current price but given its volatility relative to Gold and the chance for Gold to pull back, Silver may trade lower over the short-term.

In fact, Silver is completing a very rough and ugly head and shoulders pattern leading me to believe that we may see some weakness in the coming weeks and months.

If commodities in general pull back over fears of a slowing economy both Gold and Silver will find any potential gains limited.

Canadian banks are showing value but again prices may get cheaper over the next six months. The TSX looks oversold as do most Canadian banks.

Asian economies look to continue their recovery and growth. A slowdown in the Chinese economy will defuse talk of a large currency appreciation. Non-correlated Asian markets should do well over the second half of the year but I expect problems in the US to overshadow the growth story and mute any potential large gains.

Stock prices in China and Hong Kong should continue to struggle as IPO’s and bond sales are absorbed.

Avoid South American equity markets over the near term as the difficulties facing individual countries may spill over into neighboring countries causing problems. Some of the problems include the reconstruction efforts in Chile, government and trade problems coming out of Argentina, and a Brazilian economy firing on all cylinders.

While the oil spill in the Gulf continues to provide tremendous amounts of speculation on the ultimate size of liability for BP there are some factors to consider.

Did Exxon go out of business after the Valdez spill? No.

Did any of the cigarette companies go out of business after the government settlement? No.

Does BP have attractive assets worldwide? Yes.

Will they survive? Yes.

No doubt, there will be additional regulation, massive fines, and increased scrutiny over oil and gas operations in the Gulf, Alaska, and all over the lower 48 states but the industry will survive and move forward for the future. As a high-risk investment, BP does look attractive under $30 but remember that this is a high-risk investment. The stock could trade lower if the broader market moves lower over the second half of the year.

***Disclosure note: I own BP stock in my personal account. This is not an endorsement to buy or sell nor should it be taken as such.***

The recent decline was due to portfolio window dressing as I noticed that Gold and certain Asian markets where I trade (which are up for the year) held up and saw buying as the US market (which is down) fell as portfolio managers rushed to tweak portfolios ahead of the mid-year reports.

The rally last week in the US was not met with a similar rally in the markets I follow which, in addition to weak volume, leads me to be very cautious.

It is my opinion that we are still in a topping formation and look to see lower markets through the end of the year with the major indices ending up down for the year.

Personally, I am putting together a buy list of stocks with good dividend yields and earning bases and plan on waiting for the right moment to allocate capital.

In the coming weeks and months I will expand more upon the themes touched on during the first and second parts of my commentary.

Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

2010 Investment Thoughts – What I said back in January Monday, Jul 19 2010 

2010 Investment Thoughts
Note and partial disclaimer: My thoughts are not my personal views (politics especially) but how I see
the world unfolding based on the past year and historical trends. My personal views often clash with
my investing views but as I learned long ago, you should not invest with your emotions but rather
invest with conviction based on what is actually happening in the market.
Interest Rates and Currencies
The decision by Australia to raise interest rates is important in that Australia and to a larger extent Asia
will lead the rate raising cycle. Quantitative easing and economic stimulus packages in Asia will be
eased back in the coming 12 months in order to prevent potential asset bubbles down the road.
This is an important step in the decoupling of Asian economies from US and European markets.
Capital market flows have already shifted to Hong Kong as evidenced by the tremendous IPO volume.
No longer do Asian companies need to do a primary IPO in New York as there is sufficient capital
available in Hong Kong and Shanghai to allow for a single IPO in Hong Kong alone.
Going forward INTER-Asian trade will become more important than INTRA-Asian trade and
companies which provide the necessary goods and services will be the winners in the next Asian bull
market.
All of this should have a neutral effect on the USD Index since only the Japanese Yen is included
within the US Index so exchange movements between the USD and other Asian currencies will have
more effect individually than on the USD Index as a whole.
As a point of reference, the Euro makes up 57.6% of the USD Index and the Japanese Yen makes up
13.6%. No other Asian currency has representation and South America has no representation in the
Index.
This obscures the collapse of the dollar, as dollar depreciation will be greatest against emerging market
economies.
US interest rates will not rise in 2010 due to the Congressional elections later in 2010 and the massive
quantitative easing programs still in place. It would not be surprising to see no interest rate increases
before the end of 2011.
Given the amount of debt issued by the US Government this year to fund the budget deficit, combined
with the removal of funding caps on Fannie Mae and Freddie Mac there is no possible way for the
Federal Reserve to raise interest rates without considerably adding to the budget deficit.
If three month interest rates were to rise from the current 9 basis points to 100 basis points what would
that do for the overall interest expense on Treasury debt? Simple example but it drives home a point on
why interest rates cannot rise.
Anyone that trades the Gold and Silver markets knows that when the government is involved as an
invisible hand it makes the market inefficient and obscures the real value over time. The same is
happening now with the US Treasury Yield curve and MBS markets where the Federal Reserve is
buying securities.
The USD will bottom out again around 70 and test the long-term support. The question will be the
response from Central Banks around the world. A retest of long-term support is not bad as support
levels need to be retested in order to build an effective base.
The real story could be coming out of the IBAC countries (India, Brazil, Australia, and China). These
countries have for the most part sidestepped the global recession and have resumed a growth track.
Please note that the IBAC countries have no representation in the USD Index, which as I mentioned
earlier, obscures the depreciation of the US Dollar against global currencies.
I tend to believe that we will begin to see a slow round of interest rate increases across the IBAC
countries and Asia as they end their quantitative easing programs and return rates to normalized levels.
Will the story of 2010 be a decoupling between IBAC + Asia versus Europe + US?
Could the next story be an emerging carry trade where you short US Treasuries and go long Australian
bonds?
Equity Markets
I guess we have to ask ourselves what the drivers will be in 2010. The market appears to be forming a
distribution top which would likely lead to a downturn sometime in 2010. We had massive quantitative
easing, an expected recovery, government stimulus, and a retraction of mark-to-market to drive us from
the March lows. Now we need a new story to push the market higher.
We could see one final move higher but I am worried about the BULL-BEAR data. There is a distinct
lack of bears and an overabundance of bulls. Sometimes this data takes months to play out in terms of
a correction but I think we will see a significant correction sometime before the end of 2010. In fact,
the stock market charts remind me of the 1970’s.
The Dow and S&P appear to be forming distribution tops. Be cautious if you are putting new money
into the market.
I expect the ultimate top to come at a point in time where Gold and Silver are blazing to new highs, the
Federal Reserve announces an end to quantitative easing, and the US Dollar retests its 2008 lows. This
may not happen all at the same time but happen over a period of weeks or a month or so.
The consumer could be the story in 2010 but in order for that to happen we are going to need to see
increased consumer confidence, which will come from businesses resuming the hiring of employees,
which will come from an increase in business confidence.
Non-performing loans continue to cause problems in the US banking sector. In fact, financial stocks
remind me of post crash Internet stocks. Some recovered all of their losses 10 years later but ask the
shareholders of stocks like Microsoft, Cisco, Yahoo, and Intel about their 10-year returns.
There are values but you should not be buying now for a buy-and-hold strategy. If you are trying to
capture the last 10% of a move where you missed the first 70-80% you are better off staying off to the
side and wait for another 70-80% move to come along.
As financial stocks go, so goes the US markets and overseas markets will likely follow.
Growth in employment will determine consumer demand and GDP growth going forward in 2010.
Even if we see a significant drop in unemployment consumers will be cautious for a year until they feel
more comfortable about their futures.
As the US recovers and consumers begin to spend, however the trade balance will weaken as
consumers resume their appetite for foreign made goods.
Buffett buying Burlington Northern is a vote towards much higher oil prices over the next decade.
Remember his comment about the high cost of hauling freight by truck as opposed to rail. Truck costs
rise by a 3:1 ratio over rail due to high gasoline prices.
Stock markets and Gold are likely to top out at the time qualitative easing ends leading to a bear market
that will take everything down by 20%. This will lead to the final bottom before prices begin to head
higher.
Agriculture stocks will continue to do well but you need to search for value. Potash, Monsanto,
Caterpillar, and Deere are safe plays with low returns. The real story lies in the vertically companies
which actually grow, package, and resell their crops to the public. Difficult plays but fantastic gains
last year.
There is still value in these names if you are willing to do your homework.
This is a time to consider drug stocks as the beginning of the next great twenty-year bull market but
there are some very important dark swans not being noticed by Mr. Market that may destroy the
industry in a similar manner to how Philip Morris was hit with class action lawsuits.
It is too early to call the winners and losers in the healthcare bill but any bill that favors Big Pharma
will discourage innovation and necessary industry changes. It now costs more than $1 billion dollars to
bring a drug to market and the process needs to be reformed on both sides (pharma and FDA) if the
industry is expected to grow and meet the demands from an ever increasing aging global population the
process of bringing new drugs to market needs meaningful reform.
Finally, if one goes back to look at decennial statistics years ending in 0 and the early part of the decade
tend to do worse than later years. I have attached two charts from thechartstore.com to put this into
perspective.
Canada’s banking sector could not be stronger. They do face a significant problem which is directly
related to their success and that is an overabundance of equity. As we go forward, it will be difficult to
maintain strong ROE and ROA ratios.
Canadian banks have a couple of choices here. Loosen lending standards and increase risk or return
capital to shareholders in the form of dividends and buybacks. Moving along the current track will lead
to decay and lower returns.
Asian markets have rolled over and yet to recover to their prior highs. I want to see the HSI move to
new highs and begin to lead Asia higher before I consider getting bullish on Asia.
If I had to put myself on the spot, I would be long Gold and Silver through the first quarter at which
point I would switch to Short ETF’s. Oil and Natural gas stocks are interesting especially those stocks
with nice dividends to provide a cushion to a potential decline.
Investors should take a long look at increasing the dividend yield on their portfolio and lowering their
portfolio beta.
Someone buying for a longer-term horizon should really stay on the sidelines for at least a year.
Global Politics
Regional conflicts will flare up in early 2010 around the world. We are already seeing this with an
increased focus on activities in Yemen.
With the close proximity to Somalia, you can expect a greater focus on ship piracy as the world
attempts to find a solution to this regional hot spot.
Sovereign problems are likely to be a non-story in the case of Greece and California. We know the
problems and have known about them for some time now. Unless there is a major surprise, it is likely
that they have little effect on the markets. Talk of the EU collapsing to me is now like ‘The Little Boy
Who Cried Wolf’. Every year there are whispers but will anything ever happen? The cost of an EU
collapse will far outweigh the costs from the housing collapse due to the savings businesses have
realized from tariffs, currencies, etc.
California has been a basket case for at least a decade now and will continue to muddle through as they
have done in the past.
The average loss for a sitting President’s party in the House during his first set of elections is 28 seats.
Look for Democrats to lose a couple of seats in the Senate and somewhere near the average in the
House.
The Republicans have a number of problems hindering their progress.
First, the Republicans have a very weak bench and will struggle to field a full field of candidates. In
2008, the Republican Party was looking for candidates who could fund their own campaign. This is
not a roadmap for success in any election.
Secondly, the Democrats have an almost 5:1 cash advantage in terms of House races. This advantage is
significant and used to defend young Democrats who will face significant challenges in close races.
Finally, NY-23 provided a glimpse into the fractures, divides, and problems within the Republican
Party.
The Republican Party is undergoing an ideological fight for the future of the party similar to what the
Democrats went through after the 2004 elections. The question is will the next head of the party pull
them towards the center similar to Howard Dean after he ascended in 2004 or farther to the right in
advance of 2012.
The party needs to move towards the center and away from the far right if they intend on winning back
the White House in 2012.
Precious Metals and Commodities
Big run in Gold and Silver through the first quarter of 2010. As the year goes on, we turn towards
supply issues with new mines like Penasquito coming online.
If you go back to 2000 and look at a Gold chart, you will notice that Gold tends to move in a 12-18
month consolidation followed by a 6-9 month move up. We are currently in the uptrend and it should
last for another 3-6 months.
For those bearish about gold here is something to consider. The Comex has authorized participants to
deliver GLD shares in the place of physical Gold if a participant requests physical delivery.
Copper is in a seasonal uptrend that usually lasts through the end of the first quarter. Long-term
investors should avoid going long copper right now.
Oil will continue to trade along in opposition to the US Dollar index. As the US Dollar index moves
lower oil should move higher but at some point next year, more than likely in conjunction with
increased worries about the strength of the US economic recovery and a bottom in the US Dollar index.
Natural Gas is moving higher as inventories move lower but should turn around as move into summer
and inventories are replenished. A cold US winter is helping the price.
Base metals are likely to disappoint after a strong 2009. Inventories continue to rise along with prices
which will encourage questionable projects to come back online which should add to supply. If the
market heads lower base metals will be pulled lower.
Sugar had a very good run in 2009. I continue to be long the few publicly traded sugar stocks but
worry about 2010 as the leaders in one year tend to lag the next.
Avoid Argentina mining stocks until the political climate clears.
Real Estate
Canada’s real estate market reminds me of the US in 2003-04. How the banking system reacts to an
oversupply of capital will determine the future course of Canada’s real estate market.
The US real estate market will continue to be constrained by a significant amount of inventory
overhang, Option ARM’s resets, and weak commercial real estate markets. This weakness should
persist for a few more years.
Economic Growth
Slow growth in the USA as the economy continues to adjust to the new environment.
MZM and M2 growth is disinflationary and coming down to normalized levels, which is a very good
sign as it signals a coming end to quantitative easing.
The Federal Reserve cannot begin to wind down its balance sheet until they first end the purchases of
fixed income instruments.
When the balance sheet begins to shrink additional monies will move into the system in the form of
released collateral. When the Federal Reserve started taking toxic assets onto its balance sheet it
required banks to put up collateral and when those toxic assets are sold the collateral will be released.
Downward revisions to 3rd quarter US GDP foreshadow a weak recovery during 2010 and raise the
possibility of a double dip recession if government spending slows before the consumer is ready to take
over the slack.
The continuing obfuscation of US government statistics makes me question the strength of the potential
recovery. From the birth-death model in employment, lack of accurate housing data in CPI, the double
counting home sales, and lack of accurate data on the budget deficit one should question the numbers
coming out of Washington.
Watch how the market reacts to news. There is a difference between how the market should react and
how it actually does react.
Why has the 2009-10 US budget not yet been officially passed and signed into law? Check Wikipedia.
David Urban
davecurban@gmail.com
davecurban@yahoo.com
Communications are intended solely for informational purposes. Statements made should not be
construed as an endorsement, either expressed or implied. This article and the author is not responsible
for typographic errors or other inaccuracies in the content. This article may not be reproduced without
credit or permission from the author. We believe the information contained herein to be accurate and
reliable. However, errors may occasionally occur. Therefore, all information and materials are provided
“AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS
WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND
DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING
HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT
SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE
INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN
BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION
INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND
DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE
SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES,
AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND
ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider
whether the investment is appropriate for the individuals risk profile. This is not intended to be
investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable
or responsible for any losses or damages, monetary or otherwise that result from the content of this
article.

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